For decades now, Centum Investment has closed some of the hottest business deals across East Africa, creating billions of shillings for shareholders.
This year, the deals have dried up and the company has found itself in unfamiliar loss-making territory.
Yesterday, Centum reported a Sh1.98 billion loss in the first six months of the year to September 30.
This was a drop of 127.5 per cent from Sh6.8 billion profit after tax that the company reported in the same period last year, attributed to a decline in investment income.
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Revenues during the period under review fell by more than seven times to Sh633 million from Sh2.6 billion.
Even as he cuts an upbeat tone, Centum Group Chief Executive James Mworia is all too aware of the uncertainty ahead.
He says there are a number of transactions in the pipeline for the second half of the year which, if closed, will improve performance.
Only he is not sure if the deals will be closed.
“We are cautiously optimistic. We have a number of transactions we are working on but we are not sure whether they’ll close or not because Covid-19 has created an uncertainty,” Mr Mworia told reporters in a post-results briefing yesterday.
“If we close (them), they will have a material impact on the profit and loss statement up to March.”
Centum also owns significant stakes in listed and non-listed companies in sectors such as publishing, financial services and manufacturing, which have also been heavily impacted by the Covid-19 pandemic.
At a similar period last year, Centum recorded a large investment income of about Sh12 billion, which was from gains on disposal of assets. Centum makes a bulk of its returns from the disposals.
Last year October, the investment company earned Sh12.6 billion after completing the sale of its stake in Almasi Beverages, Nairobi Bottlers and King Beverage, as well as Sh2.3 billion impairment provision on assets primarily in Amu Power.?
It reported Sh7.4 billion after-tax profit for the year ended March 2020, representing a 79 per cent jump in earnings.
“In the first half, April to September, we did not have any transactions so there were neither investments nor disposals and those normally account for typically a sizeable portion of our return,” said Mworia.
“On the investment income line it really depends if we are able to close a transaction in the second half, that is the sort of thing that can have a major impact.”
The Covid-19 impact on Centum’s subsidiaries has translated to no dividends and Mworia said they were expecting dividends in the second half of the year to lift the firm.
“This year they didn’t pay because we made a decision not to take dividends so that they could conserve liquidity,” said Mworia.
Centum, which built the iconic Two Rivers Mall on the outskirts of Nairobi, also has a significant real estate portolio where Mworia sees future profits.
They have a residential development profit potential of about Sh2 billion, he said.